FINANCE27PHOTO: DAVID PAUL MORRIS/BLOOMBERG. DATA: GLOBAL SUSTAINABLE INVESTMENT ALLIANCE
BWTalks AlKelly
Despitea lotofworryabouta recession,
“wedon’tseeit,”saysthechiefexecutive
officerofVisaInc.Theconsumers
onhisglobalpaymentsnetwork
haven’tbeenslowingdowntheircard
swiping—or,increasingly,theirtapping.
—CarolMassarandJasonKelly○AlongtimeexecutiveatAmericanExpressCo.;presidentofthe
companywhenheleftin 2010 ○JoinedtheboardofVisafouryears
laterandtookthetopjobin 2016 ○Wastheheadofinformation
systemsfortheReaganWhiteHouse○ Interviewsareeditedforclarityandlength.ListentoBloombergBusinessweekWith
Carol Massar and Jason Kelly, weekdays from 2 p.m. to 5 p.m. ET on Bloomberg Radio.Whatarepeoplebuying—whereis their
moneygoing?A coupleofthingsaredriving
theincreasesin transactions.
Oneis e-commerce.And
we’reseeingmoresmaller-
ticketitems.A lotofthat
I thinkis drivenbymass-
transitpayments.Westarted
in NewYork[withtap-to-
pay]atstationsfromGrand
CentraltoBrooklyn.By
October 2020 thetransit
authorityhopestobein all
424 subwaystops.Whyis theU.S.laggingonthingslike
tap-to-pay?TheU.S.wasmuchslower
toadopta chipin thecard.
Youhavecountrieslike
PolandandHungarythat
areover90%tap-to-payin
theface-to-faceworld.In
theU.S.,thevastmajority
ofthebusinessesaresetto
beabletofacilitatetap-to-
pay.Theissueis replacing
thehundredsandhundreds
ofmillionsofcards.Bythe
endofthisyearwe’llhave
over 100 millioncardsin theUnited States that will be
tap-to-pay enabled.Will we all eventually be like China,
where all you need to carry to buy
things is your phone?I don’t think fully. Payments
is an extraordinarily local
business. Mexico, Germany,
Japan—they’re huge
cash societies to this day.
Adoption will pick up, but for
a long time there’s still going
to be a place for all kinds of
different-form factors.What’s the biggest existential threat to
Visa or the industry?I think cybersecurity. The
bad guys have access to
the same technology the
good guys do. Over the
next decade, you’re going
to have 5G really take off,
the internet of things, and
artificial intelligence getting
to the next level. Quantum
computing, perhaps. All
of that creates enormous
opportunity but also risks to
tech-based infrastructure
companies like ours.quantitative trading firm headquartered in Bala
Cynwyd, Pa., is building up a sports betting divi-
sion in Ireland, where such wagers have long been
legal. The business unit, called Nellie Analytics—
named after co-founder Jeff Yass’s dog—has about
20 employees.
Susquehanna is active on the Betfair and
Matchbook online sports betting exchanges.
Gamblers on those sites can wager against each
other, instead of with a third-party bookmaker
who sets the odds. Susquehanna offers to take the
other side of people’s bets. Rather than betting
on a single outcome against the house, it aims to
make wagers on exchanges when they seem attrac-
tively priced—a common practice for professional
sports bettors.
Sports betting won’t appeal to most hedge funds.
For one thing, the market is comparatively small and
bets by large funds could easily distort it. A more
straightforward way for finance to get into betting
is by providing the back-end technology. Exchange
operator Nasdaq Inc. has made a handful of sports
betting deals around the globe. It’s licensed tech-
nology to a U.K.-based soccer betting service called
Football Index, a virtual market where users buy and
sell stakes in players and earn dividends based on
their performance. Nasdaq technology is also used
in horse-race betting in Australia, Hong Kong, and
Sweden. Nasdaq says it’s a natural application of
what it already does. “There’s no need for a gaming
company to reinvent the wheel to handle large vol-
umes of transactions,” says Scott Schechtman, head
of new markets at Nasdaq.
Online brokerage TD Ameritrade Holding Corp.
is also in the “early stages” of exploring sports
betting. “Although we won’t comment on any
specifics, we are always evaluating potentially inno-
vative products and services,” said Vijay Sankaran,
the company’s chief information officer, in an
emailed statement. Business Insider first reported
TD Ameritrade’s interest in betting.
The research company Eilers & Krejcik Gaming
estimates that sports betting could become a $17 bil-
lion market in the U.S. if it’s fully legalized in all
50 states. And it’s likely to draw in people from
beyond the traditional gaming business. “Sports bet-
ting is broadening the field of interest,” says Chris
Grove, a partner at Eilers & Krejcik. Financial firms
are likely to test the waters, he says, though they
may be put off by the lower transaction volumes and
complex regulation. Compliance department, meet
thestategamingcommission.—AnnieMassaTHE BOTTOM LINE Like financial markets, the sports betting
business needs a lot of technology to handle transactions. That’s
one place where Wall Street sees an opportunity.